Carlton Investments Limited
Annual Report 2023

Plain-text annual report

2023 ANNUAL REPORT CARLTON INVESTMENTS LIMITED (A publicly listed company limited by shares, incorporated and domiciled in Australia) ABN 85 000 020 262 Financial Report FOR THE YEAR ENDED 30 JUNE 2023 Directors Alan G Rydge AM (Chairman) Group Secretary Auditor Bank Registered Office Murray E Bleach Greg J Robertson Peter W Horton KPMG National Australia Bank Limited Level 15, 478 George Street, Sydney NSW 2000 Telephone: (02) 9373 6732 Email: info@carltoninvestments.com.au Website: www.carltoninvestments.com.au Share Registrar Computershare Registry Services Pty Ltd Level 3, 60 Carrington Street, Sydney NSW 1115 Telephone: 1300 850 505 Home Stock Exchange The company is listed on the Australian Securities Exchange (Sydney) Limited Stock Exchange Code CIN Controlled Entities Carlton Hotel Limited (ACN 000 010 266) Eneber Investment Company Limited (ACN 000 014 540) The Manly Hotels Pty Limited (ACN 000 004 473) Annual General Meeting The 2023 Annual General Meeting will be held at: The Screening Room, State Theatre Building, 49 Market Street, Sydney, NSW at 10.00am on Wednesday 25th October 2023 1 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023chairman’s report to shareholders Dividends On 15 August 2023 the directors declared a final fully franked dividend of 60 cents per ordinary share, payable on 18 September 2023. The prior year final fully franked dividend was 44 cents per ordinary share, plus a fully franked special dividend of 14 cents per ordinary share, which were both paid in September 2022. The special dividend in the prior year was declared as a result of the profit derived from the one off in- specie dividend received from BHP. An interim dividend of 40 cents per ordinary share, together with a special dividend of 9 cents per ordinary share was paid in March 2023. The special interim dividend was declared due to the increase in special dividends received in the first half of the year, including the EVT special dividend. The prior year interim dividend, paid in March 2022, was 40 cents per ordinary share. Total ordinary share dividends paid and payable for year ended 30 June 2023, including the special interim dividend, amount to $1.09 per share, being an increase of 11.2% on the prior year dividends paid. A final preference share dividend of 7 cents per share fully franked is also payable on 18 September 2023. The record date for both the ordinary and preference final dividends is 1 September 2023. The Dividend Reinvestment Plan remains suspended. Net tangible asset backing The net tangible asset backing for each issued ordinary share at 30 June 2023, prior to the payment of the final dividend noted above and before provision for estimated capital gains tax in respect of unrealised investment portfolio gains, was $37.15 (2022: $36.99). Although the Board has no present intention of disposing of any of the Group’s equity investments, the net tangible asset backing per share after provision for tax on unrealised capital gains was $31.19 (2022: $30.95). The relevant figures at 31 July 2023 were $38.62 and $32.25 respectively, I present to you the Group’s consolidated results for the year ended 30 June 2023. Group’s operations and results Profit for the year ended 30 June 2023 was $37,406,000 compared to $33,757,000 for the prior 2022 financial year, an increase of $3,649,000 or 10.8%. It should be noted that the profit for the prior financial year included $4,755,000 from a one-off, fully franked in-specie dividend of Woodside Energy shares resulting from the merger of BHP’s petroleum business into Woodside Energy. If this one-off BHP in-specie dividend was excluded from the prior year result, the profit increase for the year ended 30 June 2023 was $8,404,000 or 29.0%. Most of this increase in profit resulted from dividends received from EVT (formerly Event Hospitality & Entertainment), the Group’s largest investment holding. EVT recommenced paying dividends in November 2022. This was after two years of no dividends being paid by EVT due to the impact of COVID related restrictions on the businesses of that group. Fully franked dividends totalling $8,005,000 were received from EVT during the year to 30 June 2023. Dividends and distributions received totalled $38,398,000, compared to the prior year amounts of $35,570,000. As noted above, prior year dividends included the BHP in-specie dividend of $4,755,000. The impact of EVT recommencing paying dividends is also noted above. Excluding the BHP in- specie dividend from the prior year, dividend and distribution income increased by 24.6% from the prior year. Included in dividends and distributions received were dividends described as special dividends amounting to $4,087,000. These special dividends included $3,694,000 received from EVT in November 2022. In the prior financial year, special dividends totalling $1,205,000 were received. With much higher interest rates and a higher level of funds held on term deposits, interest income increased from $73,000 in the prior year to $747,000 in the year to 30 June 2023. Average funds on term deposit increased by $11,900,000 and the weighted average interest rate on term deposits increased from 0.60% in the prior year to 3.31%. Administration expenses were $970,000 compared to $898,000 in the previous year. The management expense ratio (MER) for the year ended 30 June 2023 was 0.10%, compared to the prior year of 0.09%. Earnings per ordinary share Basic and diluted earnings were $1.413 per ordinary share for the year to 30 June 2023 compared to $1.275 per share for the 2022 financial year. 2 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023On a total portfolio return basis (measured by the movement in NTA per share assuming dividends are reinvested), the return for the twelve months was 3.4% (2022: minus 2.1%) compared with an increase in the S&P ASX 200 Accumulation Index over the period of 14.8% (2022: decrease 6.5%). The Group continues to hold its equity investments for the long term and does not act as a share trader nor does it invest in speculative stocks. Outlook Equity markets continue to operate in an environment of uncertainty with, persistent high inflation, high interest rates, an outlook for slow growth in China and future economic growth levels remaining in question. Trends in global markets could also influence the Australian market. We continue to have confidence in the quality and mix of the businesses in which the Group has invested. The Group will continue to seek to take advantage of market volatility and invest in well run businesses when it is considered that market prices offers good long-term value. A G RYDGE AM Chairman 15 August 2023 Investments The market value of the equity investment portfolio as at 30 June 2023 was $956,399,000 compared to $949,299,000 at the prior year end. Short term cash holdings and term deposits totalled $24,073,000 as at 30 June 2023 (2022: $27,480,000). The Board’s policy is to acquire additional investments in equities that meet the criteria of providing high levels of income through predominantly fully franked dividends and have the potential for long term capital growth. The cost of equity investments purchased during the year to 30 June 2023 totalled $13,663,000 (2022: $8,804,000). Acquisitions above $400,000 during the year were: South32 ANZ JB Hi-Fi Woodside Energy Sonic Healthcare BHP Group Elders Santos $5,019,000 $2,272,000 $1,003,000 $1,002,000 $1,001,000 $1,000,000 $996,000 $994,000 The Group also received shares in the PEXA Group via an in- specie distribution from the Link Group with a market value, at that time, totalling $460,000. During the year the company disposed of its investments in the Tassal Group and the Pendal Group, these disposals were a result of takeover offers. The consideration received for all investment disposals during the year was $1,815,000. Prior year consideration received on disposals totalled $7,844,000. Capital returns received during the year totalled $178,000. In 2022 capital returns totalling $4,303,000 were received, with large capital returns paid by Boral and Wesfarmers. There was ongoing investment market volatility during the year to 30 June 2023, with fluctuating levels of concern about ongoing issues of high inflation, rapidly increasing interest rates, economic growth prospects and geopolitical uncertainty. After a decrease of 10.2 % in the prior 2021/22 financial year, the S&P/ASX 200 Index increased by 9.7% in the year to 30 June 2023. The market value of the Group’s investment portfolio, after adjusting for investment acquisitions and disposals, decreased during the year by $4.9 million or 0.5%. Many of the Group’s larger investment holdings showed good market value increases for the year, however the overall market value performance of the portfolio was impacted by a fall in value for the Group’s largest holding, EVT. The EVT share price decreased by 10.0% for the year. Excluding the EVT holding, the increase in the Group’s investment portfolio was 6.3%. 3 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023$m TEN YEAR SUMMARY OF NET PROFITS 41.81 39.67 41.66 45.53 38.12 37.42 35.26 37.41 33.76 21.03 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CPS FULLY FRANKED DIVIDENDS PER ORDINARY SHARE 8 125 7 114 116 121 108 100 111 67 9 100 14 84 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Ordinary dividend Special dividend % DIVIDENDS PAID AS A PERCENTAGE OF NET PROFIT 84.4 76.4 76.6 77.4 76.9 77.3 77.1 76.9 77.1 75.1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 50 45 40 35 30 25 20 15 10 5 0 140 120 100 80 60 40 20 0 90.0 85.0 80.0 75.0 70.0 65.0 60.0 4 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023directors’ report FOR THE YEAR ENDED 30 JUNE 2023 The directors present their report together with the consolidated financial report of Carlton Investments Limited (“the Company”) and its controlled entities for the year ended 30 June 2023 and the auditor’s report thereon. Directors The directors of the Company in office at any time during or since the end of the financial year are: Mr Alan G Rydge AM Chairman of Directors since 1980. Non-Executive director. Broad experience as a director of various listed and private entities, formerly Deputy Chairman of Australia Post. Director (since 1978) and Chairman (since 1980) of EVT Limited. Also a director of Enbeear Pty Limited, Alphoeb Pty Limited, and Aygeear Pty Limited. Mr Murray E Bleach CA, GAICD, BA(Fin), MApFin. Member of the Institute of Chartered Accountants in Australia and Graduate of the Australian Institute of Company Directors. Independent Non-Executive Director since 2014. Chairman of the Nominations and Remuneration Committee and Chairman of the Audit and Risk Committee (from December 2021). Over 40 years’ experience in accounting and financial services, with extensive experience in infrastructure and start-up investment. He was previously in charge of Macquarie Group’s North American operations and was the CEO of Intoll Group, the Chairman of Suicide Prevention Australia and a Non- Executive Director and the Chairman of the Board Investment Committee at IFM Investors for 9 years. He is Chairman and co-founder of start-up investment group, AddVenture/Tidal Ventures and director and Chairman of Energy Action Ltd. Murray also serves at AustralianSuper Pty Ltd as the “Infrastructure and Private Equity Expert” for its Direct Investment Group & Transaction Review Committee. Mr Greg J Robertson CA, MBA, LLB, BEc, MAICD Member of the Institute of Chartered Accountants in Australia and also a member of the Australian Institute of Company Directors. Independent Non-Executive Director since May 2022. Over 35 years’ experience in business management, business valuations, mergers, acquisitions and reconstructions. Extensive experience in private equity investment across a wide range of industry sectors. He was a partner at Arthur Andersen, following which he was an Executive Director at Investec Wentworth Private Equity Limited for close to 10 years, and subsequently an Executive Director of Adexum Capital Limited for 8 years. He is currently a director of Actuity Capital Partners Pty Ltd and Echo HoldCo Pty Ltd. Mr Anthony J Clark AM, FCA, FAICD. (retired from Board on 27 October 2022) Fellow of the Institute of Chartered Accountants in Australia and Fellow of the Australian Institute of Company Directors. Independent Non-Executive Director since 2000. Chairman of the Nominations and Remuneration Committee and Chairman of the Audit and Risk Committee (from December 2014 to December 2021). Broad experience as a director of listed companies and previously practised as a Chartered Accountant retiring as a partner of KPMG in 1998. Former directorships include Ramsay Health Care Limited, Telstra Corporation Limited, Amalgamated Holdings Limited (now known as EVT Limited) and Sphere Minerals Limited. Company Secretary and Chief Financial Officer Mr Peter W Horton was appointed Company Secretary and Chief Financial Officer in October 2011. He practised as a Chartered Accountant for over 20 years prior to his retirement as a partner of KPMG in 2001. Immediately prior to joining the Company, Mr Horton was the Director of Finance and Accounting for a public company engaged in the hospitality and leisure industries, a position which he held for almost 10 years. Officers who were previously partners of the audit firm AJ Clark and PW Horton were officers of the Company during the year and were previously partners of the current audit firm, KPMG, at a time when the audit firm undertook an audit of the Company. The most recent that any of these officers previously worked with KPMG was more than 21 years ago. 5 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023directors’ report FOR THE YEAR ENDED 30 JUNE 2023 Directors’ meetings The number of directors’ meetings and meetings of committees of directors held during the year together with the number of meetings attended by each director during the financial year were: Name of Director Directors’ Meetings Audit and Risk Committee Nominations and Remuneration Committee No. of meetings held: No. of meetings attended: Mr A G Rydge Mr M E Bleach Mr G J Robertson Mr A J Clark 7 7 7 7 2 3 3 3 3 1 1 1 1 1 0 Principal activities The principal activity of the Group is the acquisition and long term holding of shares and units in entities listed on the Australian Securities Exchange. There have been no significant changes in the activity of the consolidated entity during the year under review. Environmental regulation The Group’s operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. Events subsequent to balance date Other than noted elsewhere in this report, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in subsequent financial years. Corporate Governance For the year ended 30 June 2023, the Board applied where practicable, the guidelines set out in the 4th Edition of ASX Corporate Governance Principles and Recommendations issued by the ASX Corporate Governance Council. The Company has disclosed its current 2023 Corporate Governance Statement in the Governance and Policies section on the Carlton Investments website at: https://www.carltoninvestments.com.au/AboutUs/ GovernanceandPolicies.aspx The Group has also lodged the 2023 Corporate Governance Statement and Appendix 4G with the ASX. Companies listed on the Australian Securities Exchange are required, under the ASX Listing Rules, to detail the principles and recommendations with which they have not complied and provide reasons as to why they have not done so. As disclosed in the 2023 Corporate Governance Statement, the Company complies, to the extent appropriate for an organisation of its size, with the ASX Corporate Governance Principles and Recommendations, with the exception of: • Recommendation 2.5, as the Chairman is not considered to be an independent director due to his related interests in the Company. The remaining members of the Board do not consider that this in any way diminishes the effective conduct of the Board’s functions; and • Recommendation 3.3, as the Company does not have a whistleblower policy. Given the size of the Company and also taking into account compensating procedures undertaken, the Board does not consider that this exception impacts on the effectiveness of the Board’s governance processes. 6 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023directors’ report FOR THE YEAR ENDED 30 JUNE 2023 Results and review of operations The consolidated profit for the year attributable to the members of Carlton Investments Limited was: Operating revenue Administration and finance costs 2023 $000 2022 $000 39,145 35,643 (982) (910) Profit before income tax expense 38,163 34,733 Income tax expense Net profit for the year (757) (976) 37,406 33,757 The net profit for the year to 30 June 2023 increased from the prior year by $3,649,000 or 10.8%. Included in the net profit are dividends received from EVT (formerly Event Hospitality & Entertainment). EVT recommenced paying dividends in November 2022 following two years of no dividends when the businesses of EVT were greatly affected by COVID restrictions. Fully franked dividends totalling $8,005,000 were received from EVT during the year to 30 June 2023. Included in the net profit for the prior year, to 30 June 2022, was a one-off in-specie fully franked dividend of Woodside Energy shares, valued at $4,755,000, resulting from the merger of the BHP’s petroleum business into Woodside Energy. Dividends and distributions received totalled $38,398,000, compared to the prior year amounts of $35,570,000. As noted above, prior year dividends included the BHP in-specie dividend of $4,755,000. The impact of EVT recommencing paying dividends is also noted above. If the BHP in-specie dividend was to be excluded from the prior year dividends, dividend and distribution income increased by 24.6%. Dividends received included special dividends amounting to $4,087,000, of which $3,694,000 was received as an initial special dividend from EVT in November 2022. In the prior year, special dividends totalled $1,205,000. Interest income totalled $747,000, compared to $73,000 in the prior year. The weighted average interest rate for term deposits increased from 0.60% in the prior year to 3.31%. Interest rates increased progressively throughout the year and average funds on term deposit increased by $11,900,000 million over the average amount for the prior year. Administration expenses for the year were $970,000 compared to $898,000 in the prior year. The management expense ratio (MER) for the year was 0.10% compared to 0.09% in the prior year. Equity investments purchased during the year to 30 June 2023 totalled $13,663,000 (2022: $8,804,000). Major additions to the portfolio were South 32, ANZ Bank, JB Hi-Fi, Woodside Energy, Sonic Healthcare, BHP Group, Elders and Santos. Also, during the year, the Group received shares in the PEXA Group via an in-specie distribution from the Link Group with a market value, at that time, totalling $460,000. The Group continued to invest in Australian listed entities that we considered to be well managed and are anticipated to provide attractive levels of sustainable income through predominantly franked dividends and long-term capital growth. Details of investment acquisitions over $400,000 during the year to 30 June 2023 are given in the Chairman’s Report. During the year to 30 June 2023 the Group disposed of its investments in the Tassal Group and the Pendal Group, both these disposals were as a result of a takeover. The consideration received for all investment disposals during the year was $1,815,000. This consideration included additional shares in Perpetual, with a market value of $283,000, issued by Perpetual as part consideration for their Pendal takeover. Prior year consideration received on disposals totalled $7,844,000. Capital returns received during the year totalled $178,000. In the prior 2022 year capital returns of $4,303,000 were received, with large capital returns from Boral and Wesfarmers. The investment portfolio held by the Group is valued at market values. Increments and decrements in the market value of equity investments are recognised as other comprehensive income and taken to the revaluation reserve. During the year to 30 June 2023 market values of the Group’s investment portfolio, after adjusting for investment acquisitions and disposals, decreased by $4.9 million or 0.5% (2022: decrease of $53 million, or 5.3%). The S&P/ASX 200 Index increased during the year to 30 June 2023 by 9.7% (2022: decrease 10.2%). Although most of the Group’s larger holding showed good market value increase for the year, the overall market value performance of the portfolio was impacted by a fall in the market value of the Group’s largest holding, EVT. The EVT share price showed a decrease of 10.0% for the year. Excluding the EVT holding, the increase in the Group’s investment portfolio was 6.3%. On a total portfolio return basis (measured by the movement in NTA per share assuming dividends are reinvested), the return for the twelve months was 3.4% (2022: minus 2.1%) compared with an increase in the S&P ASX 200 Accumulation Index over the period of 14.8% (2022: decrease 6.5%). 7 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023Outlook and likely developments We expect that high inflation and high interest rates will remain well into the current financial year. There are also several other continuing domestic and global uncertainties and risk factors impacting on future economic growth prospects and, in turn, on investment market valuations. We expect to see ongoing volatility in market valuations in the months ahead. The Board continues to have confidence in the mix and quality of businesses in which the Group has invested. The Group will continue to take a cautious approach when pursuing its policy of purchasing equity investments for the long term through reinvesting dividends and other income in entities listed on the Australian Securities Exchange. directors’ report FOR THE YEAR ENDED 30 JUNE 2023 Dividends • Paid during the year in respect of the prior financial year: (i) As proposed in last year’s report, a final ordinary share dividend of 44 cents per share and a special final dividend of 14 cents per, both fully franked and amounting to $15,355,000 were paid on 19 September 2022. (ii) As proposed in last year’s report, a final preference share dividend of 7 cents per share, fully franked, amounting to $6,000 was paid on 19 September 2022. • In respect of the current financial year: (iii) An interim ordinary share dividend of 40 cents per share and a special interim dividend of 9 cents per, both fully franked, were declared and paid on 20 March 2023. (iv) A final ordinary dividend of 60 cents per ordinary share in respect of the year ended 30 June 2023 has been declared. The dividend will be fully franked. Total ordinary share dividends paid or payable in respect of the year ended 30 June 2023 (v) An interim preference share dividend of 7 cents per share, fully franked, was paid on 20 March 2023. $000 12,973 15,885 28,858 6 (vi) A final preference share dividend of 7 cents per share, fully franked, has been declared. 6 Total dividends paid or payable in respect of the year ended 30 June 2023 28,870 In the financial statements preference share dividends are recorded as a finance cost, refer note 3-4 to the financial statements. 8 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023 directors’ report FOR THE YEAR ENDED 30 JUNE 2023 Remuneration Report - Audited The Company has a Board of four directors and employs two staff, one of whom is the company secretary/chief financial officer. The Board reviews the performance of the company secretary/chief financial officer and determines the appropriate remuneration after having reference to current market rates. Directors’ fees for the non-executive directors (there are no executive directors) are recommended to the Board each year by the Nominations and Remuneration Committee and, after reference to current market rates, are based on the nature of each director’s work and responsibilities. Directors do not receive additional fees for Committee participation. These fees are within the maximum amount of $450,000 that was approved by the shareholders at the 2022 annual general meeting. Performance evaluation and remuneration reviews are carried out in May each year, with any remuneration increases being effective from 1 July. No director or the company secretary/chief financial officer has a service agreement. Directors and the company secretary/chief financial officer do not receive any remuneration subject to performance conditions including bonuses or options over shares in the Company. There were no non-monetary benefits given to directors or the company secretary/chief financial officer. Their only remuneration is by way of fees and salary respectively, together with superannuation contributions which are paid to defined contribution funds. Directors’ and officer’s remuneration Short term base emolument Post employment superannuation contributions Director’s retirement payment Leave entitlements movements Directors Mr A G Rydge Mr M E Bleach Mr G J Robertson Mr A J Clark 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 $ 92,760 90,000 81,448 79,091 75,000 13,182 35,499 79,091 284,707 261,364 Company Secretary/Chief Financial Officer Mr P W Horton 2023 2022 179,500 172,500 $ 9,740 9,000 8,552 7,909 15,000 1,318 2,851 7,909 36,143 26,136 27,500 27,500 $ - - - - - - 50,000 - 50,000 - - - $ - - - - - - - - - - (2,338) 8,946 The table below sets out the Group’s performance indices in respect of the current year and the previous four years. Net profit for year ($000) Dividends cents per ordinary share# Net tangible asset backing before capital gains tax at 30 June Share price at 30 June Management Expense Ratio 2023 37,406 109^ $37.15 $28.11 0.10% 2022 33,757 98* $36.99 $28.35 0.09% 2021 21,029 67 $38.53 $30.01 0.10% 2020 38,115 111 $28.50 $22.97 0.10% # Interim, final and special dividends in respect of year ^ Included a special dividend of 9 cents per share * Includes special dividends of 14 cents for the 2022 year and 8 cents for the 2019 year Total $ 102,500 99,000 90,000 87,000 90,000 14,500 88,350 87,000 370,850 287,500 204,662 208,946 2019 45,526 133* $36.68 $31.60 0.09% 9 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023directors’ report FOR THE YEAR ENDED 30 JUNE 2023 Remuneration Report (continued) Directors’ equity holdings and transactions The movement during the reporting period in the number of ordinary shares of the Company held, directly, indirectly or beneficially, by each key management person, their spouses and their personally-related entities is as follows: Mr A G Rydge Mr M E Bleach Mr G J Robertson Mr A J Clark* Held at Change during year Held at 1 July 2022 16,084,540 1 July 2021 16,084,540 6,120 - 5,000 6,120 - 5,000 2023 2022 30 June 2023 30 June 2022 - - 3,500 - - - - - 16,084,540 16,084,540 6,120 3,500 - 6,120 - 5,000 *Mr A J Clark retired as a director on 27 October 2022 The 16,084,540 ordinary shares disclosed above as being held directly, indirectly or beneficially by Mr A G Rydge includes 13,351,639 ordinary shares held by Enbeear Pty Limited representing 50.4% of the Company’s issued ordinary shares. End of Remuneration Report Directors’ interests The relevant interest of each director in the share capital of the Group, as notified by the directors to the Australian Securities Exchange in accordance with section 205G(1) of the Corporations Act 2001, at the date of this report is as follows: Shares held in Carlton Investments Limited Held Directly Other Relevant Interests Aggregate Relevant Interests Ordinary Shares Ordinary Shares Ordinary Shares 2023 2022 2023 2022 2023 2022 1,214,360 1,214,360 14,852,116 14,852,116 16,066,476 16,066,476 - - - - - 5,000 6,120 3,500 - 6,120 - - 6,120 3,500 - 6,120 - 5,000 Mr A G Rydge Mr M E Bleach Mr G J Robertson Mr A J Clark None of the directors or entities in which the directors have a beneficial interest, hold preference shares. Mr Rydge also has a non- beneficial interest in 37,941 (2022: 37,941) preference shares by virtue of his directorship of EVT Limited. No options were granted over unissued ordinary shares in the Company to any officer of the Company during or since the end of the financial year and at the date of this report there are no unissued ordinary shares under option. Indemnification of officers The Company has agreed to indemnify the current directors and company secretary of the Company and its controlled entities for all liabilities to another person (other than the Company or a related body corporate) that may arise from their position, except where the liability arises out of conduct involving a lack of good faith. The agreements stipulate that the Company will meet the full amount of any such liabilities, including costs and expenses. No premium has been paid, or agreed to be paid, for insurance against a current or former officer’s or auditor’s liability for legal costs. 10 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023directors’ report FOR THE YEAR ENDED 30 JUNE 2023 Non-audit services During the year KPMG, the Company’s auditor, has performed certain other services in addition to its statutory duties. The Directors are satisfied that: (a) the non-audit services provided during the financial year by KPMG as the external auditor were compatible with the general standard of independence for auditors imposed by the Corporations Act 2001; and (b) any non-audit services provided during the financial year by KPMG as the external auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: (i) the nature and scope of any non-audit service provided is reviewed and approved by the Audit and Risk Committee to ensure that they do not adversely affect the integrity and objectivity of the auditor; and (ii) the amount of non-audit fees paid to KPMG in comparison to the amount of audit fees are considered to be significantly within an appropriate threshold to maintain auditor independence. Details of amounts paid to KPMG for audit and non-audit services provided during the year are: Statutory Audit - Audit and review of financial reports Services other than statutory audit - Taxation compliance services 2023 $ 2022 $ 68,626 65,611 13,420 82,046 12,320 77,931 Lead auditor’s independence declaration A copy of the auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is included after the financial statements. Parent entity financial statements The Group has applied amendments to the Corporations Act (2001) that remove the requirement for the Group to lodge parent entity financial statements. Parent entity financial statements have been replaced by the specific parent entity disclosures detailed in note 6-6 to the consolidated entity’s financial statements. Rounding off The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that legislative instrument amounts in the financial report and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated. Signed in accordance with a resolution of the Directors at Sydney on 15 August 2023. A G RYDGE AM Director M E BLEACH Director 11 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023consolidated income statement FOR THE YEAR ENDED 30 JUNE 2023 Dividends and distributions received before BHP in-specie dividend BHP in-specie dividend of Woodside Energy Shares Interest income Operating revenue Administration expenses Finance costs Profit before income tax expense Income tax expense Profit for the year Note 2-3 2-3 2-4 3-4 2-5 2023 $000 38,398 - 38,398 747 2022 $000 30,815 4,755 35,570 73 39,145 35,643 (970) (12) 38,163 (757) 37,406 (898) (12) 34,733 (976) 33,757 Basic and diluted earnings per ordinary share 2-1 $1.413 $1.275 The consolidated income statement is to be read in conjunction with the notes to the financial statements set out on pages 17 to 32. 12 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023consolidated statement of comprehensive income FOR THE YEAR ENDED 30 JUNE 2023 Net profit for the year Other comprehensive income Items that will not be reclassified to the income statement in the future: Decrease in fair value of investments Decrease in deferred tax liability relating to change in fair value of investments Total other comprehensive loss Total comprehensive income/(loss) for the year 2023 $000 2022 $000 37,406 33,757 (4,852) 2,362 (2,490) 34,916 (53,019) 12,965 (40,054) (6,297) The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 17 to 32. 13 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023consolidated statement of financial position AS AT 30 JUNE 2023 CURRENT ASSETS Cash Receivables Investments - term deposits TOTAL CURRENT ASSETS NON-CURRENT ASSETS Investments - equities Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Payables Current tax liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred tax liabilities Other financial liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Revaluation reserve Retained profits TOTAL EQUITY Note 2023 $000 2022 $000 6-1 3-2 3-1 3-1 2-5 3-3 2-5 2-5 3-4 4-1 4-1 3,073 3,610 21,000 27,683 12,480 3,238 15,000 30,718 956,399 949,299 32 956,431 984,114 31 949,330 980,048 157 284 441 152 204 356 157,656 160,263 166 157,822 158,263 825,851 20,146 416,143 389,562 825,851 166 160,429 160,785 819,263 20,146 418,633 380,484 819,263 The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 17 to 32. 14 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023consolidated statement of changes in equity FOR THE YEAR ENDED 30 JUNE 2023 Year to 30 June 2023 Equity as at 1 July 2022 Dividends paid Profit for the year Other comprehensive income: Decrease in fair value of investments Decrease in deferred tax liability relating to change in fair value of investments Other comprehensive income Total comprehensive income/(loss) Share capital $000 20,146 - Revaluation reserve $000 418,633 - 20,146 418,633 - - - - - - (4,852) 2,362 (2,490) (2,490) Total equity as at 30 June 2023 20,146 416,143 Year to 30 June 2022 Share capital $000 Revaluation reserve $000 Equity as at 1 July 2021 20,146 458,687 Dividends paid Profit for the year Other comprehensive income:- Decrease in fair value of investments Decrease in deferred tax liability relating to change in fair value of investments Other comprehensive income Total comprehensive income/(loss) - - 20,146 458,687 - - - - - - (53,019) 12,965 (40,054) (40,054) 418,633 Total equity as at 30 June 2022 20,146 Retained earnings $000 380,484 (28,328) 352,156 37,406 - - - 37,406 389,562 Retained earnings $000 368,171 (21,444) 346,727 33,757 - - - 33,757 380,484 Total $000 819,263 (28,328) 790,935 37,406 (4,852) 2,362 (2,490) 34,916 825,851 Total $000 847,004 (21,444) 825,560 33,757 (53,019) 12,965 (40,054) (6,297) 819,263 The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 17 to 32. 15 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023 consolidated statement of cash flows FOR THE YEAR ENDED 30 JUNE 2023 Note 2023 $000 2022 $000 38,197 30,200 NET CASH PROVIDED BY OPERATING ACTIVITIES 6-1 36,886 CASH FLOWS FROM OPERATING ACTIVITIES Dividends and distributions received Interest received Cash paid for operating expenses Income tax paid CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from capital returns and disposal of investments Payments for acquisition of investments Term deposits increase NET CASH FROM/(USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid Finance costs NET CASH USED IN FINANCING ACTIVITIES Net (decrease)/increase in cash held CASH AT BEGINNING OF FINANCIAL YEAR CASH AT END OF FINANCIAL YEAR 6-1 577 (965) (923) 1,710 (13,663) 52 (877) (1,017) 28,358 12,147 (8,804) (6,000) (9,000) (17,953) (5,657) (28,328) (21,444) (12) (12) (28,340) (21,456) (9,407) 12,480 3,073 1,245 11,235 12,480 The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 17 to 32. 16 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023SECTION 1 – BASIS OF PREPARATION (e) New and Revised Accounting Standards A number of new accounting standards and interpretations became mandatory for the current financial year ended 30 June 2023. These new accounting standards and interpretations have not had a material effect on the Group’s consolidated financial statements. There are also a number of new accounting standards, amendments to accounting standards and interpretations, which are not yet mandatory, which have not been adopted in preparing these consolidated financial statements. From an initial assessment, it is not expected that these new and amended accounting standards and interpretations will have a significant effect on the consolidated financial statements of the Group when they are adopted. 1-1 Reporting Entity Carlton Investments Limited (The Company) is a company domiciled in Australia. The address of the Company’s registered office is Level 15, 478 George Street, Sydney, NSW. The consolidated financial report of the Company as at and for the year ended 30 June 2023 comprises the Company and its subsidiaries (collectively referred to as the “Group”). The Group is a for-profit entity and operates predominately in the acquisition and long term holding of shares and units in entities listed on the Australian Securities Exchange and solely within Australia. The consolidated financial statements were authorised for issue by the Board of Directors on 15 August 2023. 1-2 Basis of preparation (a) Statement of compliance The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements also comply with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board (IASB). (b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except that investments in equities have been stated at their market values at balance date. (c) Functional currency and presentation These consolidated financial statements are presented in Australian dollars which is the Group’s functional currency. The ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 is applicable to the Group and therefore the amounts in the financial report and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated. (d) Changes in accounting policies The accounting policies adopted by the Group are consistent with those adopted during the previous corresponding financial year. 17 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 2023 SECTION 2 – EARNINGS AND COSTS 2-1 Earnings per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is the same as basic EPS as there are no dilutive potential ordinary shares on issue by the Company. Basic and diluted earnings per ordinary share Reconciliation of earnings used in the calculation of earnings per share: Profit as per the consolidated statement of profit Weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share 2023 $1.413 $000 37,406 2022 $1.275 $000 33,757 Number Number 26,474,675 26,474,675 2-2 Timing of recognition of income Revenues from dividends and trust distributions are recognised in the profit or loss when the right to receive those dividends and trust distributions is established, which is the date that the investment trades “ex-dividend”. Interest income comprising interest on short term deposits is recognised as it accrues. Receivables, at year end for these revenue items, are recognised on the same basis. 2-3 Dividends and distributions received Dividends and distributions received Dividends and distributions received from listed entities: Dividends – ordinary Dividends – special Distributions from trusts BHP in-specie dividend received on demerger of the BHP petroleum business to Woodside Energy (refer below) Dividends from: Investments held at year end Investments disposed of during the year 2023 $000 2022 $000 33,376 4,087 935 38,398 - 38,398 38,395 3 38,398 28,723 1,205 887 30,815 4,755 35,570 35,570 - 35,570 In the prior year, 30 June 2022, BHP paid a fully franked in-specie dividend of Woodside Energy shares resulting from the sale by BHP of its petroleum business to Woodside Energy. The value of the in-specie dividend received, being the market value of the Woodside Energy shares at that time, was $4,978,000. The value of this dividend was apportioned between the income statement and other comprehensive income at 30 June 2022 based on the increase in market value since the acquisition of the BHP shares. $223,000 of the amount received has been recognised as other comprehensive income in the Statement of Comprehensive Income and the balance of the in-specie dividend, amounting to $4,755,000, has been recognised in the Income Statement. 18 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20232-4 Administration expenses Directors’ fees and employee remuneration Auditor’s remuneration Rent and office service charges Other administration costs 2-5 Income tax Accounting policy Note 6-5 2023 $000 651 82 26 211 970 2022 $000 575 78 23 222 898 Income tax expense comprises current and deferred tax. Current or deferred income tax is recognised in the profit or loss for the year except to the extent that it relates to items recognised through other comprehensive income, when it is recognised into the revaluation reserve or directly in equity. Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax, being predominantly capital gains tax, is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets, using tax rates enacted or substantially enacted at the balance date. Deferred tax assets are reviewed at each reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Income tax expense Prima facie income tax expense calculated at 30% (2022: 30%) on operating profit Increase (decrease) in income tax expense due to: Imputation gross up on dividends received Franking credits on dividends received Difference in timing of recognition of franked dividends receivable Adjustments prior year deferred tax balances Over provision current income tax prior year Other adjustments Income tax expense Income tax expense in the statement of profit or loss comprises: Current income tax expense Adjustments prior year deferred tax balances Over provision current income tax prior year 2023 $000 2022 $000 11,449 10,420 4,384 (14,615) 3,957 (13,189) (172) (58) (50) (181) 757 865 (58) (50) 757 (90) (61) (36) (25) 976 1,073 (61) (36) 976 19 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20232-5 Income tax (continued) Current tax liability Balance at beginning of year Income tax paid Current year’s income tax provision Capital gains tax provision for realised gain in year Over provision in previous year Balance at end of year Deferred tax liability Balance at beginning of year (Decrease)/increase in deferred tax liability on change in market value of investments recognised directly in equity Capital gains tax payable taken to current tax liability Origination and reversal of timing differences Balance at end of year Represented by: Capital gains tax on unrealised investment gains Temporary differences on timing of recognition of dividend and distribution income Deferred tax asset Balance at beginning of year Origination and reversal of temporary differences Balance at end of year Represented by: Temporary differences - employee entitlements accrued 2023 $000 204 (923) 930 123 (50) 284 2022 $000 392 (1,017) 865 - (36) 204 160,263 173,076 (2,362) (123) (122) 157,656 157,571 85 157,656 31 1 32 32 (12,965) - 152 160,263 160,063 200 160,263 26 5 31 31 20 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 2023SECTION 3 – ASSETS AND LIABILITIES 3-1 Investments Current Term deposits Note 2023 $000 2022 $000 21,000 15,000 Term deposits are carried at cost. They have been placed with major financial institutions and at 30 June 2023 had remaining maturity periods of 19 to 75 days (2022: 48 to 167 days) with interest rates of 4.36% to 4.70% (2022: 0.70% to 2.95%). The weighted average effective interest rate on term deposits for the year ended 30 June 2023 was 3.31% (2022: 0.60%). Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted. Credit risk on term deposits is minimised as deposits are only made with major Australian financial institutions with acceptable credit ratings determined by a recognised rating agency. Non-Current Investments and equities Shares and units held in listed entities - at fair value 6-10 956,399 949,299 Shares and units in listed entities are measured at fair value on an ongoing basis. Inputs used to determine fair value are the unadjusted last-sale price, last-bid price and last-sell price quoted on the Australian Securities Exchange at balance date. Fair value is determined at a value within the quoted bid/sell price spread with most investments being valued at the quoted last-sale price. As the inputs used to determine the fair value of shares and units in listed entities are prices quoted in an active market, being the Australian Securities Exchange, values are categorised within Level 1 of the fair value hierarchy of measurement under Accounting Standards AASB 13. Any change in fair value of shares and units in listed entities is recognised as “other comprehensive income”, through the Statement of Comprehensive Income, directly in equity. This accounting treatment has been adopted as the shares and units held in listed entities are equity instruments held for long-term capital growth and dividend income, rather than with the primary, shorter term, object of profit from their sale. During the year to 30 June 2023 investments were acquired for consideration of $13,663,000 (2022: $8,804,000). In the prior year, the Group also received an in-specie dividend from BHP on the sale of its petroleum business to Woodside Energy. This transaction resulted in the receipt of shares in Woodside Energy to the value of $4,978.000. Proceeds from disposal of investments in the year to 30 June 2023 totalled $1,815,000 (2022: $7,844,000). These proceeds from disposals included additional shares in Perpetual with a market value of $283,000 issued by Perpetual as part consideration for their Pendal Group takeover. The proceeds from capital returns during the year to 30 June 2023 were $178,000 (2022: $4,303,000). The group is not directly exposed to interest or currency risk through its equity investments. The only individual, material investment in a listed equity, that is neither a subsidiary nor an interest in an associate or joint venture accounted for using the equity method, is: Name Principal Activities Ownership Carrying Amount Dividends Received EVT Limited Entertainment, hospitality, tourism and leisure 2023 % 2022 % 2023 $000 2022 $000 2023 $000 2022 $000 19.1 19.1 361,436 401,766 8,005 - 21 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20233-2 Receivables Current Dividends and interest receivable Timing of recognition of receivables is disclosed in note 2-2. 3-3 Payables Current Other creditors and accruals The consolidated entity’s exposure to liquidity risk related to creditors is disclosed in note 5-2. 3-4 Other financial liabilities Non-Current Cumulative preference shares 2023 $000 2022 $000 3,610 3,238 157 152 166 166 82,978 (2022: 82,978) 7% cumulative preference shares fully paid Holders of preference shares are entitled to receive a fixed cumulative preferential dividend at the rate of 7% per annum on capital paid up of $2 per existing preference share. In the event of a winding up of the Company, preference shareholders are entitled to the capital and all arrears of dividends up to the date of the commencement of the winding up paid off in priority to any payment of capital on the ordinary shares. Holders of preference shares may attend and speak at general meetings but do not have a right to vote except where at the date of the meeting any dividend or part of a dividend is in arrears or on matters which directly or indirectly affect the rights attaching to the preference shares. The preference shares when issued were not classified as redeemable. Dividends on these preference shares are recorded as a finance cost for accounting purposes. Final dividend (7 cents per preference share paid on 19 September 2022) Interim dividend (7 cents per preference share paid on 20 March 2023) Dividends paid were franked at a tax rate of 30%. 6 6 12 6 6 12 22 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 2023 SECTION 4 – SHARE CAPITAL, RESERVES AND DIVIDENDS PAID 4-1 Share capital and reserves Issued and paid up capital 26,474,675 (2022: 26,474,675) ordinary shares fully paid Movements in ordinary share capital Balance at the beginning of the financial year On market share buy-back – nil Balance at the end of the financial year 2023 $000 2022 $000 20,146 20,146 20,146 - 20,146 20,146 - 20,146 On 14 November 2001 the Company announced an On Market Buy Back of up to 2,500,000 of the Company’s ordinary shares. This Buy-Back has been extended until 28 November 2023. There were no shares bought back during the year ended 30 June 2023 (2022: Nil). At 30 June 2023 the cumulative number of shares bought back since 14 November 2001 is 806,612 at a cost of $10,700,000. The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per ordinary share at shareholders’ meetings. In the event of a winding up of the Company, ordinary shareholders rank after preference shareholders and creditors and are fully entitled to any proceeds of liquidation. Revaluation reserve Revaluation reserve 416,143 418,633 The revaluation reserve comprises the cumulative change in the fair value of equity investments net of the estimated capital gains tax relating thereto. 4-2 Dividends The following dividends were declared and paid by the Company: Declared and paid during the year 2022 Final – ordinary share Special – ordinary shares 2023 Interim – ordinary share Special – ordinary shares Total Cents per share Total amount $000 Franked/ unfranked Date of payment 44.0 14.0 40.0 9.0 11,649 3,706 10,590 2,383 28,328 Franked Franked 19 September 2022 19 September 2022 Franked Franked 20 March 2023 20 March 2023 Franked dividends declared or paid during the year were franked at the tax rate of 30%. Declared after the end of the financial year: Final – ordinary share 60.0 15,885 Franked 18 September 2023 The financial effect of the final dividend has not been brought to account in the financial statements for the year ended 30 June 2023 and will be recognised in subsequent financial reports. 23 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 2023 4-2 Dividends (continued) Dividend franking account 30% franking credits available to shareholders of Carlton Investments Limited for subsequent financial years 2023 $000 2022 $000 74,811 71,382 The above available amount is based on the balance of the dividend franking account at year-end adjusted for franking credits that will arise from the payment of the current tax liability. In addition to the above amount, there are franking credits available in subsidiary entities at 30 June 2023 totalling $5,966,000 (2022: $5,954,000). The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact on the dividend franking account of dividends proposed after the balance date but not recognised as a liability is to reduce it by $6,810,000 (2022: $6,583,000). 4-3 Capital management The Board manages the Group’s capital base so as to maintain investors’ value, market confidence and to sustain future growth of the business. In addition to endeavouring to achieve an increase in the value of capital invested by ordinary shareholders, the Board aims to be able to pay dividends which can be increased over future years. The actual level of dividends payable is dependent upon the level of income the Group receives from its investments. Capital management initiatives undertaken when appropriate from time to time include a share purchase plan, a dividend reinvestment plan and on market share buy-backs. The Group’s capital consists of total shareholders’ equity. Changes in the capital base are shown in the Consolidated Statement of Changes in Equity. SECTION 5 – RISK 5-1 Critical accounting estimates and judgements The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. A deferred tax liability has been recognised, in accordance with the requirements of Accounting Standards, in respect of Capital Gains Tax calculated on the unrealised gains applicable to listed equity investments. It is the intention of Group entities to hold these investments for the long term and not to dispose of them. Accordingly, the deferred tax liability may not be realised at the amount disclosed in the financial statements and may also be affected by subsequent changes in tax legislation in regard to capital gains. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. 5-2 Financial risk management The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The risks associated with the Group’s assets fall into three categories, namely, credit risk, liquidity risk and market risk. Market risk includes interest rate risk, currency risk and other price risk. The Group is not currently materially exposed to interest rate risk as its cash and term deposits are short term and for a fixed interest rate. There is no material direct exposure to currency risk as almost all financial assets and liabilities are denominated in Australian dollars. Credit risk Credit risk is the risk of financial loss to the Group if a counter-party to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from investment securities and term deposits. For the Company it arises from receivables due from subsidiaries. The credit risk with respect to term deposits is referred to in note 3-1. None of these assets are considered to be impaired. 24 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20235-2 Financial risk management (continued) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another asset. Liquidity risk is not considered a material risk as the only financial liabilities the Group has are for tax payable from time to time to the Australian Taxation Office, administration cost payables and payables for the purchases of investments. Cash flow forecasts are prepared on a monthly basis allowing for dividends and interest to be received, movements in term deposits, investments to be purchased, dividends to be paid and other outgoings. If the level of dividends or interest to be received were to reduce significantly the Group can reduce its planned acquisition of investments so that adequate liquid funds are available to meet any liabilities. Investments in listed entities could readily be sold on the Australian Securities Exchange to generate required funds. Market risk Market risk is the risk that changes in market prices, such as interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. As the Group invests in equities listed on the Australian Securities Exchange there will always be a market risk as the price of the equities is subject to fluctuation. Equity investments represent 97.2% of total assets at 30 June 2023 (2022: 96.9%). If the market prices applicable to the listed equity portfolio were to fall by 5% or 10%, and if this fall was spread equally over all assets in the portfolio at 30 June 2023, total equity represented by share capital, reserves and retained profits would reduce by $35,618,000 and $71,742,000 respectively after tax. A major part of the Group’s income consists of dividends and distributions received from its investments. The level of these dividends and distributions fluctuates depending on the profits earned by the entities in which investments are held. There is a risk that in downturns in the economy the level of these profits will fall and consequently may affect dividends and distributions received. The portfolio of listed equity investments is spread over a number of market sectors so as to reduce the market risk of a major fall in a particular sector. Details of investments held and the relevant market sectors are included in note 6-10. SECTION 6 – OTHER INFORMATION 6-1 Cash flow information (i) Reconciliation of cash For the purposes of the Statements of Cash Flows, cash comprises of cash on hand and call bank deposits with original maturities of three months or less. Cash at the end of the financial year as shown on the Statements of Cash Flows is reconciled to the items in the consolidated statement of financial position as follows: Cash (ii) Reconciliation of profit after income tax to net cash provided by operating activities Profit for the year as per the consolidated statement of profit or loss Finance costs Portion of BHP in-specie dividend of Woodside Energy shares recognised in profit Net cash provided by operating activities before changes in assets and liabilities (Decrease) in current tax payable Increase/(decrease) in deferred income tax Increase in other creditors and provisions (Increase) in receivables Net cash provided by operating activities 2023 $000 3,073 37,406 12 - 37,418 (44) (121) 5 (372) 36,886 2022 $000 12,480 33,757 12 (4,755) 29,014 (188) 148 20 (636) 28,358 25 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-2 Related parties (a) Key management personnel compensation Directors and the company secretary / chief financial officer do not receive any bonuses, non-cash benefits or the granting of options over shares in the Company. Their only remuneration is by way of fees and salary respectively, together with the Superannuation Guarantee levy. The key management personnel compensation comprised: Short-term: - Base emolument - Leave entitlements movements Post-employment: - Payment to director on retirement - Superannuation relating to base emoluments 2023 $ 2022 $ 464,207 (2,338) 50,000 63,643 575,512 433,864 8,946 - 53,636 496,446 Apart from details disclosed in this note, no director has entered into a material contract with the Company or the Group since the end of the previous financial year, and there were no material contracts involving directors’ interests existing at 30 June 2023. (b) Other related party transactions in respect of the Company Investments in controlled entities Class of Share Interest Held Controlled Entities Carlton Hotel Limited Carlton Hotel Limited Eneber Investment Company Limited The Manly Hotels Pty Limited Amounts receivable from controlled entities Inter-Company loans receivable Non-Current Preference Ordinary Ordinary Ordinary 2023 % 100 100 100 100 The Company 2023 $000 2022 % 100 100 100 100 2022 $000 257,717 240,279 The amounts due to the Company are non-interest bearing and are at call. Receipt of payment is not expected within twelve months and therefore the balance due is disclosed as non-current in the parent entity disclosure in note 6-6. Carlton Investments Limited has undertaken not to require repayment of all or part of the amounts owing to it by the controlled entities before 31 July 2025 if repayment would result in the controlled entities not having sufficient funds to pay their other debts as and when they fall due. Rent of premises Rent and office service charges totalling $25,522 (2022: $23,363) were paid to an entity which is controlled by a listed public company of which a director of the Company is also a director. Rent and office service charges are paid monthly at commercial rates. 26 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-2 Related Parties (continued) Management fees The Company provided accounting, administrative and other services during the year to its controlled entities for a management fee of $1,066,000 (2022: $974,000). The management fees are determined using costs incurred by the Company, plus a mark-up of 10%, and are apportioned between each controlled entity based upon investment portfolio market values. These management fees eliminate on group consolidation. Transactions eliminated on consolidation The balances and effects of transactions between controlled entities have been eliminated in the consolidated financial statements. 6-3 Financing facilities The Company has not negotiated any financing facilities. 6-4 Investment transactions The total number of transactions in securities that occurred during the financial year was 14 (2022: 14). The total brokerage paid on these transactions was $36,854 (2022: $26,106). 6-5 Auditor’s remuneration Amounts paid or due and payable for: Audit services: KPMG Audit and review of financial reports Other services: KPMG Taxation services - Compliance 2023 $ 2022 $ 68,626 65,611 13,420 82,046 12,320 77,931 6-6 Parent entity disclosures As at, and throughout, the financial year ended 30 June 2023 the immediate parent entity of the Group was Carlton Investments Limited. Result of Parent Entity Profit for the year Other comprehensive income Total comprehensive income for the year Financial position of parent entity at year end Current assets Total assets Current liabilities Total liabilities Net assets Total equity of parent entity comprising of: Share capital Retained profits Total equity 2023 $000 36,336 - 36,336 3,074 266,297 219 384 2022 $000 34,978 - 34,978 12,480 258,265 183 349 265,913 257,916 20,146 245,767 265,913 20,146 237,770 257,916 27 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-7 Operating segments The Group operates only in Australia, investing predominantly in Australian listed securities and has no reportable segments. 6-8 Deed of cross guarantee Pursuant to ASIC Corporations (Wholly Owned Companies) Instrument 2016/785, the wholly owned controlled entities named below are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and directors’ reports. It is a condition of the Class Order that the Company and each of the controlled entities enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up of any of the controlled entities under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The controlled entities have also given similar guarantees in the event that the Company is wound up. The controlled entities subject to the Deed are Carlton Hotel Limited, The Manly Hotels Pty Limited and Eneber Investment Company Limited. There are no controlled entities that are not party to the Deed. The consolidated income statement, the consolidated statement of comprehensive income and the consolidated statement of financial position, comprising the Company and controlled entities which are party to the Deed, after eliminating all transactions between those entities at 30 June 2023, are set out on pages 12, 13 and 14 of the financial statements. 6-9 Events subsequent to reporting date For final dividends declared after 30 June 2023 refer note 4-2. 28 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-10 Investments in listed equities valued at fair value through other comprehensive income SECTOR CONSUMER DISCRETIONARY Media EVT Limited Seven West Media Limited Nine Entertainment Co Holdings Limited ARN Media Limited NZME Limited Consumer Services Tabcorp Holdings Limited The Lottery Corporation Limited The Star Entertainment Group Limited G8 Education Limited Ardent Leisure Group Limited FINANCIALS Banks National Australia Bank Limited Commonwealth Bank of Australia Westpac Banking Corporation Limited ANZ Banking Group Limited Bank of Queensland Limited Bendigo & Adelaide Bank Limited Virgin Money UK plc Capital Markets Perpetual Limited Multi-Sector Holdings Gowing Bros Limited Insurance Suncorp Group Limited Medibank Private Limited AMP Limited 2023 2022 No of shares or units $000 % No of shares or units $000 % 30,786,687 1,040,000 72,540 41,027 29,630 361,436 390 142 43 26 30,786,687 1,040,000 72,540 41,027 29,630 401,766 426 132 46 34 362,037 37.85 402,404 42.39 776,541 776,541 590,400 361,000 386,224 2,201,067 573,183 1,784,093 1,113,252 2,129,338 1,117,147 549,206 862 3,984 682 375 174 6,077 0.64 368,114 38.49 58,042 57,473 38,073 26,395 11,690 9,596 1,565 776,541 776,541 369,000 361,000 386,224 2,201,067 573,183 1,784,093 1,004,298 2,129,338 1,117,147 549,206 827 3,510 1,030 381 541 6,289 0.66 408,693 43.05 60,287 51,804 34,790 22,125 14,202 10,133 1,214 202,834 21.21 194,555 20.49 435,588 11,273 1.18 424,964 12,273 1.29 4,701,144 12,082 1.26 4,701,144 12,223 1.29 194,459 185,000 170,000 2,623 651 192 3,466 0.36 194,459 185,000 170,000 2,135 601 162 2,898 0.30 29 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-10 Investments in listed equities valued at fair value through other comprehensive income (continued) 2023 2022 No of shares or units $000 % No of shares or units $000 % 30,061 55,916 111,605 1,322,000 210,938 245,167 - 60,451 18,118 498,039 27,527 426,575 1,302,253 96,053 948,196 938,000 160,860 2,309,446 502,308 164,057 164,057 471,711 100,000 5,339 3,523 3,547 1,976 2,065 1,733 - 392 159 18,734 3,860 375 4,235 1.96 0.44 964 697 387 2,048 0.22 254,672 26.63 42,659 20,805 18,449 8,683 2,312 1,823 41 94,772 9,694 1,575 11,269 9.91 1.18 30,061 55,916 111,605 1,322,000 210,938 245,167 74,364 60,451 18,118 498,039 - 426,575 1,302,253 96,053 925,596 938,000 160,860 1,073,446 502,308 164,057 - 471,711 100,000 4,945 4,569 2,627 2,274 1,979 1,841 329 413 159 19,136 4,537 - 4,537 2.02 0.48 842 983 347 2,172 0.23 247,794 26.10 38,181 16,443 16,520 4,229 2,130 1,549 - 79,052 7,500 1,371 8,871 8.33 0.93 8,508 225 0.02 8,508 178 0.02 541,764 8,034 0.84 541,764 8,544 0.90 625,362 1,163,826 298,415 235,000 280,000 24,858 4,690 1,492 1,220 669 32,929 3.44 625,362 1,163,826 298,415 235,000 280,000 19,868 3,014 1,343 954 678 25,857 2.72 SECTOR Diversified Financial Services Macquarie Group Limited ASX Limited Washington H Soul Pattinson & Company Limited WAM Capital Limited Australian United Investments Limited Australian Foundation Co. Limited Pendal Group Limited Challenger Limited Argo Investments Limited Real Estate Management & Development Lendlease Group PEXA Group Limited Real Estate Investment Trusts (REITS) Mirvac Group Cromwell Property Group Stockland MATERIALS Diversified Metals & Mining BHP Group Limited Fortescue Metals Group Limited Rio Tinto Limited South32 Limited Deterra Royalties Limited Iluka Resources Limited Sierra Rutile Holdings Limited Steel Bluescope Steel Limited Sims Metal Management Limited Gold Newcrest Mining Limited Chemicals Orica Limited Construction Materials James Hardie Industries plc Boral Limited Fletcher Building Limited CSR Limited Adbri Limited 30 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-10 Investments in listed equities valued at fair value through other comprehensive income (continued) SECTOR Containers & Packaging Amcor plc Orora Limited CONSUMER STAPLES Food, Beverage & Tobacco Treasury Wine Estates Limited Inghams Group Limited Tassal Group Limited Graincorp Limited United Malt Group Limited Elders Limited Consumer Staples Discretionary Distribution & Retail Wesfarmers Limited Coles Group Limited Woolworths Limited Endeavour Group Limited JB Hi-Fi Limited Household & Personal Products Blackmores Limited ENERGY Oil, Gas & Consumable Fuels Santos Limited Woodside Energy Group Limited Origin Energy Limited Ampol Limited UTILITIES Gas Utilities APA Group Multi-Utilities AGL Energy Limited 2023 2022 No of shares or units $000 % No of shares or units $000 % 853,133 1,258,507 12,678 4,140 16,818 1.76 164,047 17.15 853,133 1,258,507 15,391 4,594 19,985 2.11 142,487 15.01 274,795 280,000 - 112,000 112,000 84,000 609,410 609,410 173,000 144,000 22,500 3,086 734 - 877 493 553 5,743 30,068 11,225 6,873 909 984 50,059 0.60 5.23 274,795 280,000 270,000 112,000 112,000 - 609,410 609,410 173,000 144,000 - 3,119 722 1,293 1,065 366 - 6,565 25,540 10,854 6,159 1,090 - 43,643 0.69 4.60 17,000 1,602 57,404 0.17 6.00 17,000 1,197 51,405 0.13 5.42 1,732,352 459,183 1,139,489 100,000 13,027 15,814 9,583 2,994 41,418 4.33 1,594,352 429,683 1,139,489 100,000 11,830 13,681 6,529 3,423 35,463 3.74 959,991 9,302 0.97 959,991 10,819 1.14 1,627,757 17,596 26,898 1.84 2.81 1,627,757 13,429 24,248 1.41 2.55 31 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 20236-10 Investments in listed equities valued at fair value through other comprehensive 2023 2022 No of shares or units $000 % No of shares or units $000 % 22,273 207,000 50,626 20,000 521 346 637 76 22,273 207,000 40,500 20,000 549 785 431 60 1,580 0.17 1,825 0.19 4,583,600 19,709 2.06 4,583,600 17,647 1.86 100,000 2,465 0.26 100,000 1,661 0.18 222,500 45,758 9,072 235,595 131,776 222,854 113,370 303,945 14,500 31,000 160,000 113,000 1,742 659 1 222,500 45,758 9,072 1,816 490 1 2,402 0.25 2,307 0.24 0.44 0.95 3,357 818 4,175 9,042 5,957 4,033 967 816 1,017 474 251 235,595 131,776 222,854 82,370 303,945 14,500 31,000 160,000 113,000 0.47 0.89 3,388 1,062 4,450 8,418 4,956 2,719 1,115 1,062 951 307 209 13,515 1.41 956,399 100.00 11,319 1.19 949,299 100.00 income (continued) SECTOR INFORMATION TECHNOLOGY Software & Services Computershare Limited Link Administration Holdings Limited NextDC Limited Domain Holdings Australia Limited TELECOMMUNICATION SERVICES Telecommunication Services Telstra Corporation Limited INDUSTRIALS Capital Goods Seven Group Holdings Limited Commercial & Professional Services IPH Limited Brambles Limited Left Field Printing Group Limited Transportation Transurban Group Atlas Arteria HEALTH CARE Health Care Equipment & Services Ansell Limited Sonic Healthcare Limited Healius Limited Ramsay Health Care Limited Resmed Inc. Estia Health Limited Regis Healthcare Limited TOTAL 32 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023notes to the consolidated financial statementsFOR THE YEAR ENDED 30 JUNE 2023declarations DIRECTORS’ DECLARATION 1. In the opinion of the Directors of Carlton Investments Limited (“the Company”): (a) the consolidated financial statements and notes that are set out on pages 12 to 32, and the Remuneration Report on pages 9 to 10, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the financial year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; (c) there are reasonable grounds to believe that the Company and the Group entities identified in note 6-2 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those Group entities pursuant to ASIC Corporations (Wholly Owned Companies) Instrument 2016/785. 2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief financial officer for the financial year ended 30 June 2023. 3. The directors draw attention to note 1-2 to the consolidated financial statements, which include a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors A G RYDGE AM Director M E BLEACH Director Dated at Sydney 15 August 2023 33 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023declarations LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 To the Directors of Carlton Investments Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Carlton Investments Limited for the financial year ended 30 June 2023 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPMG David Kells Partner Sydney, Australia 15 August 2023 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 34 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023 Independent Auditor’s Report To the shareholders of Carlton Investments Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Carlton Investments Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year ended on that date; and The Financial Report comprises: • • Consolidated statement of financial position as at 30 June 2023; Consolidated income statement, Consolidated statement of comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended; • Notes including a summary of significant accounting • complying with Australian Accounting Standards and the Corporations Regulations 2001. policies; and • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. Key Audit Matters Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. 35 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023Valuation of listed equity investments ($956,399,000) Refer to Note 3-1 to the Financial Report The key audit matter How the matter was addressed in our audit Valuation of investments in listed equities is a key audit matter due to: • Size of the Group’s portfolio of listed equities. These investments represent 98% of the Group’s total assets at year end; and • Importance of the performance of these investments in driving the Group’s operating revenue and capital performance, as reported in the Financial Report. As a result, this was the area with the greatest effect on our overall audit strategy and allocation of resources in planning and performing our audit. Our procedures included: • We assessed the appropriateness of the accounting policies applied by the Group, including those relevant to the fair value of investments, against the requirements of the accounting standards; • We checked the existence of investments, being the ownership and quantity held, to external independent share registry electronic records as at 30 June 2023; • We checked the valuation of a sample of investments, as recorded in the general ledger, to externally quoted market prices from relevant stock exchanges on the 30 June 2023; and • We evaluated the Group’s disclosures of investments, using our understanding obtained from our testing, against the requirements of the accounting standards. Other Information Other Information is financial and non-financial information in Carlton Investments Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of Directors for the Financial Report The Directors are responsible for: • • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and • assessing the Group’s and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. 36 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023 Auditor’s responsibilities for the audit of the Financial Report Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Carlton Investments Limited for the year ended 30 June 2023, complies with Section 300A of the Corporations Act 2001. Director’s responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 9 to 10 of the Directors’ report for the year ended 30 June 2023. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG David Kells Partner Sydney, Australia 15 August 2023 37 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023securities exchange requirements FOR THE YEAR ENDED 30 JUNE 2023 DETAILS OF SHAREHOLDINGS AS AT 16 AUGUST 2023 SHAREHOLDERS (Ordinary Shares) VOTING RIGHTS: 1 Vote for each Ordinary Shareholder POLL: One vote for each fully paid ordinary share held SHAREHOLDERS (7% Cumulative Preference Shares) VOTING RIGHTS: Restricted - Subject to Article 9 SUBSTANTIAL SHAREHOLDERS - ORDINARY SHARES ENBEEAR PTY LIMITED * Includes associates’ holdings 16,066,476* SUBSTANTIAL SHAREHOLDERS - PREFERENCE SHARES EVT LIMITED 37,941 DISTRIBUTION OF SHAREHOLDERS Category Ordinary 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 & Over Number of Ordinary Shareholders holding less than a marketable parcel Category Preference 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 & Over Number of Preference Shareholders holding less than a marketable parcel No. of Shareholders No. of Shares 488,300 2,242,149 1,382,035 4,462,511 17,899,680 26,474,675 1,205 907 191 179 12 2,494 118 No. of Shareholders No. of Shares 8,319 6,627 17,575 50,457 82,978 30 4 3 2 39 18 38 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023securities exchange requirements FOR THE YEAR ENDED 30 JUNE 2023 DETAILS OF SHAREHOLDINGS (continued) AS AT 16 AUGUST 2023 TWENTY LARGEST ORDINARY SHAREHOLDERS 1. Enbeear Pty Limited 2. Alphoeb Pty Limited 3. Rydge A G 4. Washington H Soul Pattinson and Company Ltd 5. T N Phillips Investments Pty Limited 6. Somoke Pty Ltd 7. Gowing Bros Limited 8. Marlen Pty Limited 9. Ravenscourt Proprietary Limited 10. A.J Dixon Pty Ltd 11. Charles and Cornelia Goode Foundation Pty Ltd 12. Citicorp Nominees Pty Limited 13. Phillips J N 14. Hamilton R S 15. Netwealth Investments Limited 16. Govett Investments Pty Ltd 17. Bofinger Dr M 18. Decerna Pty Ltd 19. ACN 009 757 948 Pty Ltd 20. A & M Dixon Investments Pty Ltd Issued Ordinary Shares TWENTY LARGEST PREFERENCE SHAREHOLDERS 1. EVT Limited 2. Morton I E & D L 3. Wilcorp No 41 Pty Limited 4. Green A J 5. Winpar Holdings Limited 6. Cameron W R 7. Seven Bob Investments Pty Ltd 8. Neild D R G 9. Cameron A D 10. Elkington Dr G B 11. Turner A H 12. Fitzharris J M 13. Hallworth G T 14. Cameron K V M 15. Elkington M 16. Crawley D E 17. Lukins N L 18. Lamproglou J 19. Gowing J E 20. Morton I E Issued Preference Shares No. of shares held % of capital held 13,351,639 1,415,231 1,214,360 462,988 245,000 226,956 206,224 176,785 173,121 168,716 136,000 122,660 100,000 96,523 91,856 89,546 88,313 87,297 86,164 86,069 18,625,448 26,474,675 50.4 5.4 4.6 1.8 0.9 0.9 0.8 0.7 0.7 0.6 0.5 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 70.4 No. of shares held % of capital held 37,941 12,516 6,010 5,819 5,746 2,127 1,700 1,500 1,300 1,000 834 833 800 750 585 534 466 350 300 300 81,411 82,978 45.7 15.1 7.2 7.0 6.9 2.6 2.0 1.8 1.6 1.2 1.0 1.0 1.0 0.9 0.7 0.6 0.6 0.4 0.4 0.4 98.1 39 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023ordinary dividends and share issues SINCE 1 JULY 2013 Date Share issue/Dividend Issue price/ Dividend rate Franking % 18/09/2013 Cash dividend 20/03/2014 Cash dividend 17/09/2014 Cash dividend 19/03/2015 Cash dividend 21/09/2015 Cash dividend 21/03/2016 Cash dividend 26/09/2016 Cash dividend 26/09/2016 Cash dividend – special 20/03/2017 Cash Dividend 25/09/2017 Cash Dividend 20/03/2018 Cash Dividend 24/09/2018 Cash Dividend 25/03/2019 Cash Dividend 23/09/2019 Cash Dividend 23/09/2019 Cash Dividend – special 23/03/2020 Cash Dividend 21/09/2020 Cash Dividend 22/03/2021 Cash Dividend 20/09/2021 Cash Dividend 21/03/2022 Cash Dividend 19/09/2022 Cash Dividend 19/09/2022 Cash Dividend - special 20/03/2023 Cash Dividend 20/03/2023 Cash Dividend - special 18/09/2023 Cash Dividend 40 $0.58 $0.37 $0.63 $0.43 $0.65 $0.46 $0.68 $0.07 $0.48 $0.68 $0.51 $0.70 $0.55 $0.70 $0.08 $0.55 $0.56 $0.26 $0.41 $0.40 $0.44 $0.14 $0.40 $0.09 $0.60 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 CARLTON INVESTMENTS LIMITED AND ITS CONTROLLED ENTITIES • ANNUAL REPORT 2023Carlton Investments Limited ABN 85 000 020 262 Level 15, 478 George Street, Sydney NSW 2000 Telephone: (02) 9373 6732. Email: info@carltoninvestments.com.au Website: www.carltoninvestments.com.au 

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